Question 1

Assume that a monopoly firm's price is $4,marginal cost is $3 and the absolute value of price elasticity of demand is 4.Based on this information we can conclude that the firm:

Accepted Answer

A) is maximizing profit. 
B) should increase output. 
C) should reduce output. 
D) should increase price but keep output constant. 
A) is maximizing profit. 
B) should increase output. 
C) should reduce output. 
D) should increase price but keep output constant.

Question 2

Which of the following is true for a monopoly firm?

Accepted Answer

A) The monopolist's demand curve is downward-sloping and the marginal revenue curve lies above the demand curve. 
B) The monopolist's demand curve is upward-sloping and is the same as the marginal revenue curve. 
C) The monopolist's demand curve is downward-sloping and the marginal revenue curve lies below the average revenue curve. 
D) The monopolist's demand curve is upward-sloping and is the same as the total revenue curve. 
A) The monopolist's demand curve is downward-sloping and the marginal revenue curve lies above the demand curve. 
B) The monopolist's demand curve is upward-sloping and is the same as the marginal revenue curve. 
C) The monopolist's demand curve is downward-sloping and the marginal revenue curve lies below the average revenue curve. 
D) The monopolist's demand curve is upward-sloping and is the same as the total revenue curve.

Question 3

A company is granted a patent on automobile technology which,when fitted in a car,will park the car into a parking spot automatically.
(
A)Assume that demand for this automatic parking technology is positive and show the equilibrium price and quantity in the market.

Accepted Answer

During the life of the patent,the sole s

Question 4

A monopolist has the following short-run total cost,marginal cost,and demand functions:
Total Cost: $$T C = 32 + 2 Q + \frac { 1 } { 2 } Q ^ { 2 }$$  
Marginal Cost: $M C = 2 + Q$ Demand: $Q = 52 - 2 P$ where P is the price per unit of output,and Q is the quantity of output.
(
A)What price and quantity combination maximizes the monopolist's total revenue?

Accepted Answer

The efficient price-quantity combination

Question 5

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

Accepted Answer

A) average revenue is zero. 
B) price is maximum. 
C) total revenue is maximum. 
D) marginal revenue is maximum. 
A) average revenue is zero. 
B) price is maximum. 
C) total revenue is maximum. 
D) marginal revenue is maximum.

Question 6

Which of the following statements about the effects of monopoly is incorrect?

Accepted Answer

A) A monopoly restricts output to maximize profits. 
B) A monopoly raises price above the competitive level. 
C) A monopoly causes input prices to rise. 
D) A monopoly causes a redistribution of income. 
A) A monopoly restricts output to maximize profits. 
B) A monopoly raises price above the competitive level. 
C) A monopoly causes input prices to rise. 
D) A monopoly causes a redistribution of income.

Question 7

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

Accepted Answer

The monopolist's profit-maximizing outpu

Question 8

A monopolist will never operate on the lower half of the demand curve because for this range of output:

Accepted Answer

A) average revenue is negative. 
B) marginal cost exceeds marginal revenue. 
C) total revenue can be increased further. 
D) marginal revenue is positive. 
A) average revenue is negative. 
B) marginal cost exceeds marginal revenue. 
C) total revenue can be increased further. 
D) marginal revenue is positive.

Question 9

Monopoly power does not guarantee positive profits because _____.

Accepted Answer

A) demand elasticity in monopoly markets is relatively low 
B) monopoly firms are price takers 
C) sales and profits of monopoly firms are restricted by the demand curve 
D) the monopolist's demand curve is the same as the marginal revenue curve 
A) demand elasticity in monopoly markets is relatively low 
B) monopoly firms are price takers 
C) sales and profits of monopoly firms are restricted by the demand curve 
D) the monopolist's demand curve is the same as the marginal revenue curve

Question 10

Which of the following statements is true regarding a monopolist?

Accepted Answer

A) A monopolist's short-run supply curve is upward-sloping. 
B) A decrease in demand will always cause a monopolist to reduce output. 
C) A monopoly firm that operates at a point above average total cost should shut down. 
D) Marginal revenue is greater than marginal cost for a profit-maximizing monopolist. 
A) A monopolist's short-run supply curve is upward-sloping. 
B) A decrease in demand will always cause a monopolist to reduce output. 
C) A monopoly firm that operates at a point above average total cost should shut down. 
D) Marginal revenue is greater than marginal cost for a profit-maximizing monopolist.

Question 11

The following figure shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist.
Figure 11-1  
-Based on Figure 11-1,competitive firms will receive producer surplus equal to area:

Accepted Answer

A) ACFH. 
B) EIF. 
C) AVF. 
D) AWEH. 
A) ACFH. 
B) EIF. 
C) AVF. 
D) AWEH.

Question 12

The following table shows the total revenue and total cost for a monopolist at various levels of output.
Table 11-2 $$\begin{array} { | c | c | c | } 
\hline \text { Output } & \text { Total Revenue } & \text { Total Cost } \
\hline 1 & 12 & 22 \
\hline 2 & 26 & 26 \
\hline 3 & 50 & 32 \
\hline 4 & 58 & 40 \
\hline 5 & 60 & 51 \
\hline 6 & 61 & 66 \
\hline 7 & 58 & 86 \
\hline 8 & 48 & 112 \
\hline 9 & 36 & 142 \
\hline
\end{array}$$
-What is the profit-maximizing level of output for the monopolist in Table 11-2?

Accepted Answer

A) 3 
B) 4 
C) 5 
D) 1 
A) 3 
B) 4 
C) 5 
D) 1

Question 13

Which of the following statements about the long-run equilibrium of a monopoly firm is incorrect?

Accepted Answer

A) A monopoly firm has no supply curve. 
B) A monopoly firm will never sell where the demand is elastic. 
C) A monopoly firm will not always make economic profits. 
D) A monopoly firm's demand curve coincides with its average revenue curve. 
A) A monopoly firm has no supply curve. 
B) A monopoly firm will never sell where the demand is elastic. 
C) A monopoly firm will not always make economic profits. 
D) A monopoly firm's demand curve coincides with its average revenue curve.

Question 14

Which of the following would take place if a competitive firm acquired monopoly power in the market through economies of scale and became a natural monopoly?

Accepted Answer

A) Producer surplus will increase and consumer surplus will fall 
B) Consumer surplus will be transferred to producers resulting in a deadweight loss 
C) Consumer surplus will fall but will not affect producer surplus 
D) A deadweight loss will arise in the market equal to the fall in producer surplus 
A) Producer surplus will increase and consumer surplus will fall 
B) Consumer surplus will be transferred to producers resulting in a deadweight loss 
C) Consumer surplus will fall but will not affect producer surplus 
D) A deadweight loss will arise in the market equal to the fall in producer surplus

Question 15

Which of the following would reduce the monopoly power of a single firm in a monopoly market?

Accepted Answer

A) The acquisition of a patent for its production process 
B) An increase in the demand for the firm's product 
C) An increase in the price of the firm's product 
D) A reduction in the number of rival firms 
A) The acquisition of a patent for its production process 
B) An increase in the demand for the firm's product 
C) An increase in the price of the firm's product 
D) A reduction in the number of rival firms

Question 16

The marginal revenue curve of a monopolist:

Accepted Answer

A) is the same as the monopolist's demand curve. 
B) is downward-sloping. 
C) is horizontal. 
D) has a slope that is equal to half the slope of the demand curve. 
A) is the same as the monopolist's demand curve. 
B) is downward-sloping. 
C) is horizontal. 
D) has a slope that is equal to half the slope of the demand curve.

Question 17

The following table shows the total revenue and total cost for a monopolist at various levels of output.
Table 11-2 $$\begin{array} { | c | c | c | } 
\hline \text { Output } & \text { Total Revenue } & \text { Total Cost } \
\hline 1 & 12 & 22 \
\hline 2 & 26 & 26 \
\hline 3 & 50 & 32 \
\hline 4 & 58 & 40 \
\hline 5 & 60 & 51 \
\hline 6 & 61 & 66 \
\hline 7 & 58 & 86 \
\hline 8 & 48 & 112 \
\hline 9 & 36 & 142 \
\hline
\end{array}$$
-Refer to Table 11-2.At the profit-maximizing output,the price elasticity of demand _____.

Accepted Answer

A) is elastic 
B) is inelastic 
C) is unit elastic 
D) cannot be determined without more information 
A) is elastic 
B) is inelastic 
C) is unit elastic 
D) cannot be determined without more information

Question 18

The following figure shows the profit-maximizing output of a monopolist who faces constant average and marginal costs.
Figure 11-6  
-Refer to Figure 11-6.When the firm operates as a profit-maximizing monopolist as compared to a perfectly competitive firm,consumer surplus changes by _____.

Accepted Answer

A) -ABC 
B) AFBG 
C) -P''ACP 
D) P''ABP 
A) -ABC 
B) AFBG 
C) -P''ACP 
D) P''ABP

Question 19

The following figure shows the profit-maximizing output of a monopolist who faces constant average and marginal costs.
Figure 11-6  
-Refer to Figure 11-6.What is the deadweight loss as a result of the monopolist's market power?

Accepted Answer

A) FGC 
B) ABGF 
C) PBAP'' 
D) ABC 
A) FGC 
B) ABGF 
C) PBAP'' 
D) ABC

Question 20

At an output of 1,000 units,a monopoly firm's average revenue is $40,its marginal revenue is $30,its marginal cost is $30,its average variable cost is $35,and fixed costs are $5,000.Given this information,we can conclude that the monopolist:

Accepted Answer

A) is earning zero economic profit. 
B) is earning an economic profit equal to $5,000. 
C) is making an economic loss and should shut down. 
D) should increase output to maximize profit. 
A) is earning zero economic profit. 
B) is earning an economic profit equal to $5,000. 
C) is making an economic loss and should shut down. 
D) should increase output to maximize profit.

Assume that a monopoly firm's price is $4,marginal cost is $3 and the absolute value of price elasticity of demand is 4.Based on this information we can conclude that the firm:

Which of the following is true for a monopoly firm?

A company is granted a patent on automobile technology which,when fitted in a car,will park the car into a parking spot automatically. ( A)Assume that demand for this automatic parking technology is positive and show the equilibrium price and quantity in the market.

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

Which of the following statements about the effects of monopoly is incorrect?

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

A monopolist will never operate on the lower half of the demand curve because for this range of output:

Monopoly power does not guarantee positive profits because _____.

Which of the following statements is true regarding a monopolist?

The following figure shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist. Figure 11-1 -Based on Figure 11-1,competitive firms will receive producer surplus equal to area:

Which of the following statements about the long-run equilibrium of a monopoly firm is incorrect?

Which of the following would take place if a competitive firm acquired monopoly power in the market through economies of scale and became a natural monopoly?

Which of the following would reduce the monopoly power of a single firm in a monopoly market?

The marginal revenue curve of a monopolist:

The following figure shows the profit-maximizing output of a monopolist who faces constant average and marginal costs. Figure 11-6 -Refer to Figure 11-6.When the firm operates as a profit-maximizing monopolist as compared to a perfectly competitive firm,consumer surplus changes by _____.

The following figure shows the profit-maximizing output of a monopolist who faces constant average and marginal costs. Figure 11-6 -Refer to Figure 11-6.What is the deadweight loss as a result of the monopolist's market power?

At an output of 1,000 units,a monopoly firm's average revenue is $40,its marginal revenue is $30,its marginal cost is $30,its average variable cost is $35,and fixed costs are $5,000.Given this information,we can conclude that the monopolist:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 11: Monopoly

Assume that a monopoly firm's price is $4,marginal cost is $3 and the absolute value of price elasticity of demand is 4.Based on this information we can conclude that the firm:

Which of the following is true for a monopoly firm?

A company is granted a patent on automobile technology which,when fitted in a car,will park the car into a parking spot automatically. ( A)Assume that demand for this automatic parking technology is positive and show the equilibrium price and quantity in the market.

If marginal costs are zero,a monopolist will maximize profit by producing at the point where:

Which of the following statements about the effects of monopoly is incorrect?

Assume that a firm faces a linear demand curve P = 170 - 4Q.Its cost function is given by C = 40 + 10Q.Show how the equilibrium output varies when the firm operates as a monopoly and as a perfectly competitive firm.

A monopolist will never operate on the lower half of the demand curve because for this range of output:

Monopoly power does not guarantee positive profits because _____.

Which of the following statements is true regarding a monopolist?

The following figure shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist. Figure 11-1 -Based on Figure 11-1,competitive firms will receive producer surplus equal to area:

Which of the following statements about the long-run equilibrium of a monopoly firm is incorrect?

Which of the following would take place if a competitive firm acquired monopoly power in the market through economies of scale and became a natural monopoly?

Which of the following would reduce the monopoly power of a single firm in a monopoly market?

The marginal revenue curve of a monopolist:

The following figure shows the profit-maximizing output of a monopolist who faces constant average and marginal costs. Figure 11-6 -Refer to Figure 11-6.When the firm operates as a profit-maximizing monopolist as compared to a perfectly competitive firm,consumer surplus changes by _____.

The following figure shows the profit-maximizing output of a monopolist who faces constant average and marginal costs. Figure 11-6 -Refer to Figure 11-6.What is the deadweight loss as a result of the monopolist's market power?

At an output of 1,000 units,a monopoly firm's average revenue is $40,its marginal revenue is $30,its marginal cost is $30,its average variable cost is $35,and fixed costs are $5,000.Given this information,we can conclude that the monopolist:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters